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Posted on 02/12/2009 4:36:22 AM PST by Born Conservative
The state has identified $2.26 million in questionable expenses at the western Pennsylvania juvenile detention center involved in Luzerne County’s public corruption investigation, according to a draft audit obtained Wednesday.
Those expenses include limousine rides to the King of Prussia Mall and NCAA basketball tournament, a fishing trip on Butler Township attorney Robert Powell’s yacht and a $3,500 custom-made suit for former Hazleton Mayor Mike Marsicano, the audit said.
The state Department of Public Welfare launched the audit to determine if Western Pa. Child Care’s costs were accurate and “reasonable” because those costs drive the amount of state reimbursement given to Luzerne County and other counties that lodge youth there.
Two Luzerne County judges – Mark Ciavarella and Mike Conahan – are set to plead guilty today for receiving $2.6 million in kickbacks in exchange for favorable rulings and other actions that led to Luzerne County’s use of Western PA Child Care and the PA Child Care detention center in Pittston Township.
In response to the findings, the state plans to reduce the facility’s allowable costs from $7.4 million to $6.1 million, which will reduce the daily rates that will be used for state reimbursement.
Construction costs also play a role in the reimbursement formula, and the state plans to knock $1 million off the recorded $14 million tab to finance the building.
The reason: The audit found that the facility’s owners – Powell and Pittsburgh area attorney Greg Zappala – withdrew $1 million of the construction loan proceeds as “consulting fees” paid to companies they owned. Half went to Powell’s company, Vision Holdings Inc., and half went to Zappala’s company, Consulting Innovations and Services Inc., the audit said.
Zappala last year bought out Powell’s ownership stake in Western PA Child Care.
Dan Fee, a spokesman for both juvenile facilities, said Zappala received the audit report after it was posted on media Web sites. He said Zappala will review the report and issue a public response in the near future.
Powell could not be reached for comment.
Luzerne County Commissioner Chairwoman Maryanne Petrilla said the information in the audit is “shocking and indefensible.”
“However, it’s marked draft, and the owners will have a chance to respond. These expenses, if charged to the state, are inexcusable,” Petrilla said.
Minority Commissioner Stephen A. Urban said he “strongly recommends” that federal authorities investigate the audit findings as part of the county corruption probe.
The $1 million in withdrawn construction proceeds was part of $2.26 million in questionable expenses.
The remaining $1.26 million in questioned costs were singled out because of lack of evidence that they were necessary, reasonable and competitively procured, the audit said.
According to the audit, those expenses include:
• $533,125 in unsupported “administrative fees” paid to the center owners.
• $202,746 in payments to individuals or companies connected to the owners for management services, rent, office expenses, legal expenses, marketing and employee background searches.
• Costs associated with meals, travel and staff vehicles that were not adequately supported with appropriate documentation.
• Reimbursement for golf outings and donations.
• $64,686 in mortgage interest paid on construction loan funds misidentified as consulting fees.
• $51,482 in interest paid on a line of credit. The state questioned the need for this credit when company funds were loaned interest-free or withdrawn by the center owners and their related companies.
• $84,000 for perks.
The audit is packed with examples of such benefits, including a $3,500 suit for Marsicano purchased from Stephen Kempson in New York City and billed to Powell.
Marsicano was a principal with Zappala and Powell in Gladstone Partners, which wants to build a cargo airport in the Hazleton area. Marsicano placed his interest in a blind trust when he unsuccessfully ran to reclaim his Hazleton mayor seat, and Powell sold his interest to Zappala last year.
Marsicano’s company – Marsicano Law Investigations – also was paid $20,075 by the Western PA Child Care management company to do background searches, the audit said. The state found no formal agreement or proof of competitive price comparisons, and most of the information provided by the business was already part of mandatory state clearances for center employees.
The $4,500 chartered Florida fishing trip was for Zappala and included two days on Powell’s yacht “Reel Justice.”
The $5,800 purchase of limousine service from Event Transportation Management in Scranton was for trips on March 23 through March 25, 2007. The bill went to Powell but didn’t specify who participated.
Some of these costs were incurred through Mid-Atlantic Youth Services, a for-profit firm that operates both detention centers. The state labeled these expenses as questionable because there were no written work agreements and/or supporting documentation, including evidence the expenses were a necessary part of running the detention center.
They include:
• A $65,000 management fee and $3,557 office expense payment to the Powell Law Group, which is owned by Powell, allegedly for accounting services.
• $8,600 in rent to Big Kahuna Realty LLC, another Powell-owned company, allegedly for a space for a Powell law employee who performed the accounting services.
• $20,000 to Gladstone Partners, LP, for legal fees.
• $3,264 to Legal Eye Productions, LLC, -- another Powell company -- for marketing.
• $250 to Virtual Legal Assistant, LLC, for marketing/public relations. Former Powell law employee Patrick J. Owens Jr., of West Hazleton, is listed as the secretary and treasurer of this company.
• $10,020 for an automobile for the Mid-Atlantic CEO.
• $1,378.86 for promotional items like golf towels and tees, shirts, umbrellas, visors and pens.
• $287 for Pittsburgh Steelers football game tickets.
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Thanks for this post.
ping
Your welcome.
The 2 judges go before the Federal Judge today regarding their plea agreement. There is speculation that the corrupt judges may back out or change their story.
Wow, people from down in SE PA used to go to Sugarman's Eynon Drug Store before the KOP mall was anything except crap.
90 miles in ninety minutes, they had a fantastic sporting goods department inside a drug store. Hunting and Fishing, mostly they went for hunting supplies. Gas was about 20 cents a gallon.
to coin a phrase from Glenn Beck, hold on a sec while I duct-tape my head to keep it from exploding! over this kind of corruption arggggggggg
Sugarman’s - used to go there a lot when I was a kid. That was a great place.
Eynon is in Lackawanna County, but that county is just as corrupt.
Read this article and get an idea of where the Trillion Dollar Stimulus Pork Bill will end up..........
Don’t diss my mall. I used to live in Coatesville, and a trip to KOP was a shopper’s mecca. I could spend a day there. I think it is still the biggest mall on the east coast.
It wasn’t even enclosed when it was built, there were maple gum ball trees growing in between stores that have long since gone bankrupt.
I moved out of that area back ‘76.
It was the most corrupt place I ever lived. Every interaction with local government involved an ‘envelope’.
When someone wanted a teaching job, they went before the board, with an envelope.
Addy Asphalt would hand envelopes to the state inspectors as they put sludge down on the turnpike and called it asphalt.
Got a traffic ticket, get the envelope.
etc etc
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